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Investigator: IRS screened few progressive groups

FILE - In this June 6, 2013 file photo, acting IRS commissioner Danny Werfel testifies on Capitol Hill in Washington. Werfel unveils his plan to fix an agency besieged by scandal. President Barack Obama ordered Werfel to conduct a 30-day review of the IRS when he appointed him last month. (AP Photo/Charles Dharapak, File)

WASHINGTON (AP) -- A Treasury Department inspector general says the Internal Revenue Service screened only a few progressive groups seeking tax-exempt status for possible political activity, as a clash escalated between that investigator and congressional Democrats who called his probe of the agency misleading.

In a letter to lawmakers released Thursday, J. Russell George said his investigation found "progressives" was not among the inappropriate terms IRS screeners used to decide if groups merited close scrutiny for political work. Too much political activity can disqualify an applicant for a tax-exempt designation.

Nonetheless, George wrote that "additional research" by his investigators found that of 298 applicants for tax-exempt status that the IRS flagged for possible political involvement between 2010 and 2012, six had "progress" or "progressive" in their names. Another 14 cases with "progress" or "progressive" in the group's name were not sidetracked for additional examination, he wrote.

Thirty percent of such groups got special attention because of possible political work, George wrote.

"In comparison, our audit found that 100 percent of the tax-exempt applications with Tea Party, Patriots or 9/12 in their names were processed" for potential political activity, he said.

That did not satisfy Rep. Sander Levin of Michigan, top Democrat on the House Ways and Means Committee.

The term "progressives" did appear on some lists, released earlier this week by Levin, that also included "Tea Party" and that IRS workers used to watch for groups that might merit tough screening. But George's letter noted that "Progressives" appeared on a different part of that list, and said that such groups were sent to different screeners than the ones who processed tea party applications.

Levin criticized George for not revealing the involvement of progressive groups or the second set of screeners until now. He said George's report should have explored those avenues.

"The failure of the IG's audit to acknowledge these facts is a fundamental flaw in the foundation of the investigation and the public's perception of this issue," said Levin, using the abbreviation for inspector general.

Democrats have complained that George's investigation was one-sided. George's report, released in May, detailed IRS mistreatment of conservative groups seeking tax-exempt status and was released days after the IRS acknowledged and apologized for those activities.

Levin and other Democrats have argued the public has been presented with an unbalanced view of the IRS' activities, with a narrative about mistreatment of conservatives that some Republicans have used, without foundation, to suggest direction from the Obama administration.

At a Ways and Means committee hearing on Thursday, Levin said he wanted that panel to have George answer questions at a future session.

Rep. Dave Camp, R-Mich., Ways and Means chairman, said that "no taxpayer, regardless of political affiliation, should be unfairly targeted." But he said that indications are that conservatives had been treated worse.

"So far, the evidence only shows conservatives being systematically targeted by the IRS, not just flagged" on agency lists, Camp said.

Some progressive groups seeking tax-exempt status have complained about facing lengthy delays and detailed questions from the IRS.

But it has not yet been clearly shown that as many faced the same extent of mistreatment as conservative organizations. Dozens of conservative groups experienced delays of a year or more, and many received scores of detailed questions that officials have since said were overly intrusive, including demands for information about their donors.

In his letter, George said his investigators have "multiple sources of information corroborating" that tea party groups' applications were set aside for close examinations, including interviews with IRS employees, emails and other documents.

But George added, "We found no indication in any of these other materials that 'progressives' was a term used to refer cases for scrutiny for political campaign intervention."

IRS regulations allow tax-exempt social welfare organizations to engage in some political activity but it cannot be their primary mission.

The back-and-forth over George's investigation overshadowed an appearance before Ways and Means on Thursday by Danny Werfel, who President Barack Obama appointed to head the IRS last month.

Werfel has repeatedly criticized those actions, replaced several top officials who he said bore some responsibility and has erected new procedures aimed at speeding work on tax-exempt applications and learning more about what happened.

Werfel has said he found mismanagement but no purposeful wrongdoing at the IRS. Camp said Thursday that Werfel's conclusion was "incomplete" because Werfel did not interview several former top IRS officials, including former commissioner Douglas Shulman.

Werfel also came under Republican fire for his agency's request for a $1 billion budget increase next year, about 10 percent, with several lawmakers recounting revelations about costly agency conventions and videos some workers made.

"Until the IRS proves that it can responsibly manage its current funds, the IRS will not see one more dime in taxpayer funding," Camp said.

Werfel said no decisions had yet been made on the agency's previous plans to distribute $70 million in bonuses to employees, payments that have been required by union contracts. He said bargaining was underway.